Atmus Filtration Technologies Inc.

Hello, everyone. Thank you for joining us and welcome to the Atmos Filtration Technologies second quarter 2026 earnings call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. I will now hand the conference over to Todd Chirillo, Executive Director of Investor Relations. Please go ahead, Todd.

Thank you, Piercy. Good morning, everyone, and welcome to the Atmos Filtration Technologies second quarter 2026 earnings call. On the call today, we have Steph Disher, Chief Executive Officer, and Jack Kienzler, Chief Financial Officer. Certain information presented today will be forward-looking and involve risks and uncertainties that could materially affect expected results. Please refer to the slides on our website for the disclosure of the risks that could affect our results and for a reconciliation of any non-GAAP measures referred to on this call. For additional information, please see our SEC filings and the investor relations pages available on our website at ATMIS.com. Now, I'll turn the call over to Steph.

Thank you, Todd, and good morning, everyone. Today, I will review our second quarter results and share details of our progress executing our four pillar growth strategies. I will also provide updates to our outlook for 2026. Jack will then speak to our financial results and segment performance. I am pleased to share that we achieved record sales in the second quarter and delivered strong results among our key metrics, including adjusted EBITDA, free cash flow, and EPS. I want to thank our global team for their dedication to our customers and their efforts in delivering these impressive results. Now let me provide you an update on the integration of Cook Filter, our first industrial filtration acquisition which we closed earlier this year. Our team has made tremendous progress and we have exited more than 95% of the transition services agreements. We expect all remaining integration activities to be completed during the third quarter. With the integration nearly complete, we are turning our attention to growth initiatives in our industrial solutions segment. We continue to see value creation opportunities from Cookfilter's deep industry experience, combined with our filtration capabilities and global footprint, which will provide ongoing benefits for all stakeholders. Let's now turn to an update on our capital allocation strategy. Our strong cash generation provides us with balance sheet flexibility for both growing the business and returning capital to shareholders. With this balanced approach, we expect share repurchases to be $20 to $40 million in 2026, aligned with our previous guide. Looking forward, we intend to allocate surplus cash towards paying down gross debt. This will position us for investing in future growth opportunities. Now let's turn to our four pillar growth strategy. Our first pillar is to grow share in first fit. We continue to win with the winners by growing our long-term partnerships with leading global and regional OEMs across a broad range of applications. We are leaders in filtration science with our latest generation Nanonet N3 filtration media and advanced testing capabilities strategically located around the world. This allows us to expand our first-fit customer reach across a broad range of applications and provide advanced filtration solutions for OEMs. Our second pillar is focused on accelerating profitable growth in the aftermarket. Our global aftermarket consists of thousands of customers across many applications. We have dedicated teams located where our customers need us. We have developed a robust pipeline of opportunities and are working every day to bring our industry-leading fleet guard and cook filter products to current and new customers. Our third pillar is focused on transforming our supply chain. We have launched Lean the Atmos Way, our lean-based production system. The program includes implementation of standardized management systems and lean operating practices, which improves productivity and supports sustainable margin expansion. I want to recognize our team in Mexico for becoming the first ATMOS site to achieve certification in lean, the ATMOS way. In addition, our focus on relentless improvement has allowed us to continue raising our delivery and on-shelf availability metrics to all-time highs through the Atmos Control Distribution Network. We have the right products for our customers when and where they need us. Our fourth pillar is to expand into industrial filtration markets. Following the acquisition of Cook Filter, we continue to review a robust pipeline of opportunities with a focus on industrial air to build a platform of scale by leveraging cook filter and creating value through targeted bolt-on acquisitions. While our primary focus is industrial air, we remain opportunistic in evaluating industrial water and liquid filtration assets with the goal of identifying an anchor investment that can serve as the foundation as we build out our broader industrial platform over time. We are focused on delivering long-term shareholder value through the disciplined development and execution of industrial filtration opportunities. Now let's discuss our second quarter financial results. Sales were a record $528 million compared to $454 million during the same period last year, an increase of 16.4%. driven by the acquisition of Cook Filter and strong performance in Power Solutions. Adjusted EBITDA was $109 million or 20.7% compared to $95 million or 21% last year. Adjusted earnings per share was $0.82 in the second quarter of 2026 and adjusted free cash flow was $67 million. also during the second quarter, we returned $18 million of cash to shareholders through share buybacks and dividends. Now let's turn to our outlook for the power solution segment. In the aftermarket, we are starting to see signs of health in the overall freight market, including higher spot rates and increasing optimism for improved freight activity. However, we have yet to see a significant inflection and therefore continue to expect the market to be relatively flat year over year. In our first bit market, the US EPA has provided the industry with some regulatory clarity surrounding the implementation of 2027 emissions standards. The agency has proposed allowing current engines to be sold into 2027 with a non-conformance penalty. While this is expected to ease some pre-buy pressure, customers have indicated a stronger second half driven by improved market conditions and a cyclical recovery. We are already seeing the benefits of this cyclical recovery in our 2Q results and have good visibility through the end of the year. We also expect continued market share gains in both aftermarket and first fit through our multi-channel distribution strategy improved on-shelf availability, and winning with new and existing customers. For power solutions, overall, we expect volume growth in a range of approximately flat to 2%, inclusive of global markets and share gains. Additionally, pricing is expected to add approximately 1.5%, and foreign exchange is expected to be a tailwind of approximately 2%. In total, we expect Power Solutions revenue to be in a range of $1.82 to $1.865 billion, which represents growth of approximately 4.5% at the midpoint. In our industrial solutions segment, we expect favorable market conditions and strong performance to continue, with total revenue to be in a range of $155 to $165 million. Taken together, we expect total company revenue to be in a range of 1.975 to 2.03 billion, an increase of approximately 13.5% at the midpoint. We are narrowing our full year adjusted EBITDA guidance and now expect to be in a range of 19.75% to 20.25%. Lastly, adjusted EPS is expected to be in a range of $2.85 to $3. In summary, our team continues to successfully execute our four pillar growth strategy and provide the protection our customers need and value most. I want to thank all at Masonian for their strong performance in the first half. I remain confident in the ability of our team to continue to deliver for all our stakeholders. Now, I will turn the call over to Jack.